Bitcoin fell from $81K to $77K following Fed Chair Warsh's hawkish Jackson Hole speech signaling potential rate hikes and reaffirming the Fed's 2% inflation target.
Macro & Markets ·
Bitcoin declined from above $81,000 to below $77,000 within hours of Fed Chair Kevin Warsh's Jackson Hole remarks, which signaled the central bank's commitment to its 2% inflation target despite current price pressures running well above that level. Warsh's message underscored that elevated inflation persists—the Fed's preferred PCE gauge sits at 3.7% year-over-year, with a six-month annualized rate of 4.1%—and that additional monetary policy action remains necessary to bring it in line with the central bank's objective.
Market participants quickly repriced rate expectations following the speech. Prior to Warsh's remarks, traders had assigned roughly one-third probability to a September rate increase; afterward, those odds jumped to approximately 60%. US Treasury yields rose sharply, the dollar strengthened, and the broader selloff extended across equities, precious metals, and other risk-sensitive assets. The shift mirrors a reversal of the macro conditions that had driven Bitcoin's earlier advance.
The policy environment now reflects tension between two competing forces: Treasury efforts to support financial conditions through recent bond-market activity versus the Federal Reserve's divergent mandate to control inflation. Whether tighter monetary policy expectations can sustain downward pressure on Bitcoin remains to be seen, particularly given the strength of economic data Warsh cited—including business investment growth near 9% annually, unemployment around 4%, and relatively accommodative credit conditions.